Money talks

What's your net worth? 10 financial terms everybody should understand

Some people believe that, unless you work in the world of finance, there is no need to understand financial terms and concepts. Well, nothing could be further from the truth. Finance is a core part of society, and financial literacy is important for everyone. At the same time, some of these terms are thrown around without fully understanding their meaning. What is a principal? Is compound interest different from normal interest? What is a person’s net worth? Here are 10 financial concepts that everyone should know.

Whether you are investing a sum of money or taking a loan, there is an initial sum of money involved. The principal is the initial amount of money that you invest or borrow. It does not include any interest, fees, or future earnings, and it’s used as a base to calculate the interest that will be added to a loan and the returns from an investment.

We commonly understand interest as the cost we pay for borrowing money, often calculated as a percentage of the principal amount. That is ‘simple interest’, but what about ‘compound interest’? Any accumulated interest from previous periods generates its own interest as well, so compound interest is the sum of the interest on the principal amount and the accumulated interest.

We often hear the media discuss the net worth of celebrities, politicians, and other public figures, but can the worth of a person be calculated? When it comes to finance, it can, and it follows a very simple formula: the value of all your assets minus any money you owe. This simple but effective calculation is a good way to check how healthy your finances are at any point in time.

Paying a loan is never as simple as adding interest to the initial amount. In most cases, there are different fees involved, which means that you might owe more than you think. The Annual Percentage Rate or APR will give you the true cost of a loan —initial amount, interest, and any additional fees— represented as a percentage. With the APR, you can also compare loans to see which one offers better options.

If you own shares in a company, you will receive dividends, a portion of the profit made by the company. How do dividends work? Paid regularly, often quarterly, its value is decided by the company’s board of directors, who will determine an amount to be paid per share. The more shares you have, the more dividends you will receive.

When taking out a loan, we are assuming that we will pay it over a period of time. This is called amortization. While the amortization of a loan gives us the possibility of paying a large sum back in regular smaller installments, it also involves interest (both simple and compound) and fees added to the principal amount.

An asset is an item of value, and this includes cash, but also other valuable things such as objects, properties, bonds, shares, etc. Liquidity refers to how quickly an asset can be turned into cash without affecting its value, which in turn tells us how quickly we could access funds to cover any payment or debt.

If you ever looked into buying a home, you might have heard the term ‘escrow’. An escrow is a legal arrangement where a third, neutral party temporarily controls the funds of a transaction, releasing them once the contract’s terms have been fulfilled. This helps prevent fraud, reduce financial risks, guarantee fairness, and ensure that neither party takes advantage of the other.

If you are a financial delinquent, you might be in trouble, but not in the way you imagine. When taking on a loan, you assume a responsibility to pay it back. If you fail to do so, or fall behind in your payments, you become a ‘delinquent’. While delinquency is temporary, it will hurt your credit score and can eventually turn into default, which allows the lender to take action against you.

We often use the word liability to describe a disadvantage or something that could cause difficulties. In its financial sense, liabilities refer to a responsibility or obligation we assume, such as paying back a loan. In this sense, liabilities —money we owe— are opposite to assets —money we possess.

Secret uses

There’s a hidden microphone in your phone, and here’s where it is

You’ve probably twisted a bread bag closed, filled up your car, or pulled a sheet of aluminum foil from the box thousands of times without giving it a second thought. But many of the everyday objects we’ve used for decades have clever features that most people never notice. From the tiny pocket on blue jeans to the little arrow next to your gas gauge, these hidden designs have practical stories behind them, and once you know them, you’ll never look at these familiar items the same way again.

If you own an iPhone, you’ve probably noticed the tiny black dot next to the rear camera. It’s small, so people tend to assume it’s another camera sensor or even part of the phone’s design. The small hole found near the camera bump on every iPhone is actually a rear microphone.

It captures clearer audio when you’re recording videos and helps reduce background noise during FaceTime and regular phone calls. If you own an iPhone Pro model from the iPhone 12 Pro onward, you'll also see a larger dark circle. That’s the LiDAR scanner, which sends out invisible infrared light to create a 3D map of your surroundings. It helps the camera focus faster in low light, powers Apple’s Measure app, and makes augmented reality features much more accurate.

Whether it's a holiday dinner, an anniversary, or simply a nice meal with friends, you’ve probably held a wine bottle and noticed the deep indentation in the bottom. Many people tend to think the deeper the indent, the fancier the bottle.

That indentation is called a punt, and it’s been a part of the bottle-making for centuries. Originally, it helped strengthen hand-blown glass bottles, making them less likely to crack under pressure. Today, it still adds structural stability, particularly for sparkling wines, while also giving servers a comfortable place to rest their thumb when pouring, though some say it helps collect the sediment as wines age. In any case, a deeper pun doesn’t automatically mean a better or more expensive bottle.

Almost every driver has experienced that awkward moment at the gas station. You pull up to the pump, step out of the car, and suddenly realize the fuel door is on the opposite side.

To help prevent exactly that situation, many modern vehicles include a small arrow next to the gas pump symbol on the dashboard’s fuel gauge. The arrow points towards the side of the vehicle where the fuel filler door is located. It’s a small detail on the dashboard, yet once you notice it, you’ll never have to circle the pump again.

All elevators look pretty much the same. Bigger or smaller, they all look similar, a gray box with a mirror and buttons. But if you pay close attention, you may notice there’s a small round opening near the top of the door.

That opening is a keyhole used by trained maintenance technicians and emergency responders. With a special elevator key, they can manually unlock the landing doors when repairs are needed or if passengers become trapped inside. The system allows professionals to reach the elevator safely without damaging the doors or relying solely on electrical controls. Hopefully, most of us will never need to see it in action. But in an emergency, that tiny opening becomes one of the most important parts of the system.

If you’ve ever stood in the bread aisle comparing loaves, you’ve probably noticed the colorful plastic clips or twist ties holding the bags shut. Contrary to what many think, they’re not simply a part of the packaging.

For many bakeries and grocery stores, the colors indicate the day a loaf was delivered or baked. While the exact color schedule can vary between bakeries and regions, employees use the system to quickly spot older inventory and rotate fresher bread to the back of the shelf. That way, customers are more likely to pick up the freshest loaf available.

Whether you wear jeans every day or only pull them out for yard work, you’ve probably noticed the tiny extra pocket tucked inside one of the front pockets. It’s too small for a phone and not very useful for loose change, but there’s a reason for it.

Back in the 1800s, when Levi Strauss & Co. created rugged denim pants for miners, ranchers, and cowboys working across the American West, pocket watches were commonplace. Workers needed a safe place to carry their watches while riding horses, so that little pocket was designed specifically to protect the watch from damage. Pocket watches disappeared, but the tiny pocket became such an iconic part of blue jeans that manufacturers have continued including it for well over a century.

Almost everyone has had the same frustrating experience. You pull on a sheet of aluminum foil, and suddenly the entire roll slides out of the box and lands on the kitchen counter.

That’s exactly why major manufacturers such as Reynolds introduced the small side tabs, known as end locks, in the mid-1990s. By pressing the tabs inward, they hold the cardboard roll in place like built-in axles. This keeps the roll from sliding out of the box, makes it much more stable as you pull, and helps the serrated edge cut a cleaner, straighter sheet. It also reduces waste by preventing the foil from bunching up or tearing unevenly. It’s a simple design, yet useful as it can get.

Every household has pens lying around for all kinds of purposes. And most of them have a common feature, a hole in the cap, which isn’t simply part of the design.

BIC and other pen manufacturers included the opening as a safety feature. If someone, especially a child, accidentally swallows a pen cap, the hole can allow a small amount of air to pass through, reducing the risk of complete airway blockage while emergency help is on the way. The design became part of border efforts to improve consumer product safety after choking incidents drew attention to the danger of small plastic objects.

If you grew up sewing or watching somebody do it, you probably remember the classic tomato-shaped pincushion sitting beside the sewing basket. Hanging from it was a tiny red strawberry that looked like nothing more than a cute finishing touch.

In reality, that little strawberry has its own job. Instead of soft stuffing, it’s filled with emery, a gritty material made from crushed abrasive minerals. Running pins and needles through it helps polish away tiny spots of rust, smooth rough edges, and keep the points sharp enough to glide through fabric more easily.

Think back to the first time you learned to type. Maybe it was at work, or on a family computer. Wherever it was, someone probably told you to keep your fingers on the "home row." That’s exactly why the F and J keys have tiny raised ridges.

The bumps let your index fingers find the correct starting position by touch alone, allowing you to type without constantly looking down at the keyboard. The technique, known as "touch typing," is widely credited to American court stenographer Frank Edward McGurrin, who demonstrated it in 1888. As typewriters became more common, manufacturers experimented with different ways to help typists orient their hands, and by the mid-20th century, companies such as IBM standardized the subtly raised plastic bars that remain on nearly every keyboard today.